Human Resource ManagementLecture 15

MGT 350

Last Lecture• Performance Management System• The performance management systems need to include:

– decisions about who should evaluate performance

– what format should be used

– how the results should be utilized

• The Appraisal Process• Difficulties in Performance Management Systems

Three approaches:• Absolute standards• Relative standards• Objectives

Topic

Establishing the Performance Management System

Factors that can Distort Appraisals

Factors that can Distort Appraisals

• Leniency error – Each evaluator has his/her own value system. – Some evaluate high (positive leniency) and

others, low (negative leniency).

• Halo error: Evaluator lets an assessment of an individual on one trait influence evaluation on all traits.

Factors that can Distort Appraisals

• Similarity error: Evaluator rates others in the same way that the evaluator perceives him or herself.

• Low appraiser motivation: Evaluators may be reluctant to be accurate if important rewards for the employee depend on the results.

Factors that can Distort Appraisals

• Central tendency: The reluctance to use the extremes of a rating scale and to adequately distinguish among employees being rated.

• Inflationary pressures: Pressures for equality and fear of retribution for low ratings leads to less differentiation among rated employees.

• Inappropriate substitutes for performance: Effort, enthusiasm, appearance, etc. are less relevant for some jobs than others.

Factors that can Distort AppraisalsAttribution Theory • Evaluations are affected based on

whether someone’s performance is due to– internal factors they can control– external factors which they cannot

• If poor performance is attributed to internal control, the judgment is harsher than when it is attributed to external control.

Factors that can Distort Appraisals

• Impression management:

• If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating.

Creating More Effective Performance Management Systems

Use Behavior-Based Measures:

• Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such as “loyalty” or “friendliness”.

Creating More Effective Performance Management Systems

Combine Absolute and Relative Standards:

• Absolute standards tend to be positively lenient; relative standards suffer when there is little variability.

• Combining the standards tends to offset the weaknesses of each.

Creating More Effective Performance Management Systems

Provide Ongoing Feedback:

• Expectations and disappointments should be shared with employees on a frequent basis.

Creating More Effective Performance Management Systems

Use Multiple Raters:• Increasing the number of raters leads to more

reliable and valid ratings. – Use peer evaluations: Coworkers offer constructive

insights and more specific evaluations.– Upward appraisals allow employees to give their

managers feedback. – 360-Degree appraisals: Supervisors, peers,

employees, team members, customers and others with relevant information evaluate the employee.

Creating More Effective Performance Management Systems

Rate Selectively– Appraisers only evaluate in those areas about

which they have sufficient knowledge. – Appraisers should be organizationally as

close as possible to the individual being evaluated.

– More effective raters are asked to do the appraisals.

Creating More Effective Performance Management Systems

Train Appraisers:

• Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

Creating More Effective Performance Management Systems

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

International Performance Appraisal

• Who performs the evaluation?

– Different cultural perspectives and expectations between the parent and local country may make evaluation difficult.

– Evaluation forms may not be translated accurately.

International Performance Appraisal

• Evaluation Formats – May make sense to use different forms for

parent-country nationals and host-country nationals.

– Performance criteria for a particular position should be modified to fit the overseas position and site.

– Include a current expatriate’s insights as part of the evaluation.

Summary

• Factors that can Distort Appraisals– Leniency error – Halo error– Similarity error– Low appraiser motivation– Central tendency– Inflationary pressures– Inappropriate substitutes for performance– Attribution Theory – Impression management

Summary

• Creating More Effective Performance Management Systems– Use Behavior-Based Measures– Combine Absolute and Relative Standards– Provide Ongoing Feedback– Use Multiple Raters– Rate Selectively– Train Appraisers

International Performance Appraisal